Looking for reasons why things happen is a human instinct. While we may not always dig deep into the good things, we certainly try to mull over the bad ones. This helps us avoid them in the future.
Every time we ask the questions, “Why did this happen?” and “How will it affect me?”, we are trying to establish a cause-effect relationship. It helps us understand the basic ways in which the world functions. The process of establishing a cause-and-effect relationship is widely used in fields like writing, social studies and science simply because it can identify potential causes of problems in an orderly manner. We establish a cause-and-effect relationship in management to find out what’s affecting operations, performances and productivity in an organization.
Here we’ll discuss the meaning of cause-and-effect relationships in detail.
What Is A Cause-And-Effect Relationship?
In a cause-and-effect relationship, one event leads to another event. In research, it is the study of the effect one variable has on another. The event or variable that acts as the cause can have one or more effects.
A business exists to solve specific problems. Business analysis is typically done to identify difficulties, the underlying causes and the subsequent effects that are experienced if the problems aren’t dealt with. A business analyst will always look to establish a cause-effect relationship to propose viable solutions. Problem-solving diagrams, known as fishbone diagrams, can be implemented across all settings of a business to understand the root causes of and analyze cause-effect relationships.
Whether it’s analyzing a failing product line, implementing appropriate management policies or determining the best methods of production, establishing a cause-and-effect relationship is a high-impact measure to take. It helps to achieve desired business outcomes by enabling a manager to identify and address the root cause of a problem. The cause-and-effect relationship in management involves analysis of past problems and mistakes. The idea is to identify areas of concern in the past and avoid them in the present. We may also use it as a planning tool by inquiring into a business’s state of affairs and identifying paths for better outcomes in the future.
Here are some of the steps to analyze a cause-and-effect relationship:
Identify The Problem
We need to identify the problem of interest and describe adequately the magnitude and nature of the problem. It’s important to determine which part of the business is affected and their possible reasons.
Identify The Root Cause
The root cause of the problem can be effectively identified by analyzing an obstacle to procedures, equipment, materials and people in the business. We have to come up with as many potential causes as we can.
Identify The Sub-Causes
There are minor or additional ordeals and events that contribute to the occurrence of the major cause. We have to identify these ‘micro problems and find all the possible sub-causes contributing to the barriers. Customer dissatisfaction can result from poor product quality or average after-sales service. Similarly, employee performance can be affected by inadequate salary or poor workplace conditions. To correctly and fully resolve an issue, the aim should be to identify the exact factor that’s behind it.
Analyze And Validate The Issue
Using diagrams and flowcharts, we can have the entire pictorial representation in front of us. We must review each aspect to check the validity of the needs and the concerns that were stated and determine if they’re admissible. Ascertain which factors need real-time action and which are critical for the business, sort problems according to urgency and priority and delve deeper into the causes.
Develop An Action Plan
Once the problem, its causes and sub-causes are identified and the priority and legitimacy are ascertained, we have to come up with an action plan. An action plan embodies the remedies that are crucial for resolving the problem a business is facing. It helps to come up with authoritative business solutions.
The process can be effective only if professionals executing it are able and astute. It’s important that managers fully understand what a cause-and-effect relationship is to effectively use it as a problem-solving tool or invite assistance from able practitioners accustomed to applying it.
Now that we know the meaning of cause-and-effect relationships, let’s look at the criteria and some examples.
Establishing A Cause-And-Effect Relationship To Solve Problems
Managers must set a goal to identify causal relationships or demonstrate that an independent variable affects a dependent variable. In other words, that something acting as the cause is resulting in a certain effect. There are 3 criteria for establishing a cause-and-effect relationship:
A crucial step to establishing causality is to demonstrate an association. Start by asking a simple question: “Is there a relationship between dependent and independent variables?” For example, we might be able to establish from the relationship between income and education that, usually, a person with higher education earns more money.
The distributions of two categorical variables can be cross-clarified by cross-tabulation. We may see a higher percentage of people from certain backgrounds opt for vegetarianism, which establishes a link between those cultural conditions and attitudes toward food. Although it’s debatable as to how closely related two variables must be to establish cause, researchers generally focus on the statistical significance of associations and whether they can exist in a population than the actual strength of the association.
Time Ordering Or Temporal Precedence
Once the association is established, the time order of variables is determined. The acting principle is that cause precedes effect. The independent variable has to occur first in time to affect the dependent variable. Only then can it act as a cause and affect the other variable. Time ordering can be easily ensured in experimental designs where researchers carefully control exposure to the treatment and then measure outcomes of interest. Time ordering can be difficult to determine in cross-sectional designs, especially when relationships between variables reasonably go in opposite directions.
Turning to our earlier example, although good education creates opportunities for higher income, we may also see individuals choose to get a college degree because they earn more money. Thus, determining temporal precedence involves logic, common sense and existing research in absence of controlled experimental design. We must remember to be careful while specifying hypothesized directions of a relationship and provide theoretical or empirical evidence to support our claim.
This is probably the most troublesome criterion for causality. It demands ruling out alternative explanations for observed relationships between the variables. A false or spurious relationship exists when the observed association between two variables is an effect of a third extraneous variable.
A classic example of spuriousness is the relationship between children’s academic knowledge and their shoe size. Both can increase simultaneously as they are strongly related to age. At the same time, a 15-year-old school-going boy can have the same shoe size as a 40-year-old scholar.
Spuriousness may seem straightforward but researchers in psychology, social sciences and education face great challenges in ruling it out because of other surrounding factors that influence variables. Using experimental study designs, triangulating data sources, carefully collecting data and using statistical controls are fundamental in establishing non-spurious relationships.
While classic examples may imply that it is straightforward to establish cause and effect, it is truly a challenging aspect of research study that is designed for implementation in the real world.
Examples Of Cause-And-Effect Relationship
Signal words such as why, how, because, what and analyze help in determining a cause-and-effect relationship. Here are some examples of cause-and-effect relationships:
Global warming is threatening the Great Barrier Reef, affecting flora and fauna. Subsequently, it’s becoming less colorful and increasingly prone to severe diseases.
Effect: Reef bleaching
Root cause: Global warming
Sub-causes: Burning of fossil fuel, plastic, industry chemicals, reverse boring, excessive livestock breeding.
Action plan: Improve practices to reduce global temperature by 1.5 degrees Celsius.
Poor Employee Performance
An organization has been suffering significant losses due to incomplete tasks and delayed deliveries. Under-performing employees have been determined to be the underlying problem.
Effect: Customer dissatisfaction and losses.
Root cause: Poor employee performance.
Sub-causes: Faulty workplace machinery, poor Internet connectivity, low salaries, poor channels of communication between employees and managers.
Action plan: Replace faulty machines with newer ones, install high-speed Internet and WiFi, review salaries and incentives for each employee level and establish seamless communication channels with managers by using collaborative platforms.
Outcomes in an organization are mostly the consequence of multiple factors combining in unpredictable ways and acting in concert. Establishing a cause-and-effect relationship is essential for identifying problems and coming up with resolutions. Managers must use it to come up with the most viable solutions, prepare business visualizations of existing problems and improve the process of problem-solving within an organization.
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